Linking Globalization, Consumption, and Governance

1. Linking Globalization, Consumption, and Governance Hilary French State of the World 2004

2. Linking Globalization, Consumption, and Governance Overview: • The Spread of McWorld • Global Cooperation for Sustainable Consumption • From Johannesburg to Cancun and Beyond

3. Linking Globalization, Consumption, and Governance Today’s global economy insulates consumers from the various negative impacts of their purchases by stretching the distance between the different phases of a product’s lifecycle – from raw material extraction to processing, use, and disposal

4. The Spread of McWorld “onrushing economic, technological, and ecological forces… demand integration and uniformity and… mesmerize peoples everywhere with fast music, fast computers, and fast food…, one McWorld tied together by communications, information, entertainment, and commerce” - Benjamin Barber, 1995

5. The Spread of McWorld • The consumer society of the west is rapidly spreading to the rest of the world • Globalization over the 1990s was closely linked with a general economic boom that saw rapid growth in the movement of goods, services, and money across international borders • The growth of global trade and investment has contributed to lower costs for many consumer goods

6. Examples of Corporations with a Global Presence Coca-Cola - sells more than 300 drink brands in over 200 countries; more than 70% of the corporation’s income originates outside of the U.S. (net revenues = $19.6 billion in 2002) McDonald’s Corp. - serves 46 million customers each day; operates 30,000 restaurants in 119 countries (total revenue = $15.4 billion in 2002)

7. Examples of Corporations with a Global Presence Levi Strauss - sells clothing in more than 100 countries; its trademark is registered in 160 countries (total sales = $4.1 billion in 2002) Siemens - German company, represented in 190 countries; sells mobile phones, computers, medical supplies, lighting, and transportation systems (net sales = $96.4 billion in 2002)

8. Trillion Dollars (2002 dollars) Goods and Services Goods World Export of Goods and Services, 1950-2002 Source: IMF

9. Downside of Global Consumption Binge Forests • value of world trade in forest products climbed fourfold between 1961 and 2001, reaching $132 billion • meanwhile, the Earth’s overall forest cover has steadily declined Fisheries • world value of fish exports nearly tripled between 1976 and 2001, reaching $56 billion • meanwhile, the health of world’s fisheries has deteriorated, with 75% of world’s fish stocks fished at or beyond their sustainable limits

10. Ecological Footprint • The ecological footprint accounting system measures the amount of productive land an economy requires to produce the resources it needs and to assimilate its wastes • Countries whose ecological footprints exceed their available ecological capacity often import goods from countries enjoying surpluses, leading to ecological trade deficits

11. Available capacity Ecological footprint Ecological Footprint per Person in Selected Nations, 1999 10.1 United Arab Emirates 1.3 9.7 United States 5.3 4.8 Netherlands 0.8 4.8 Japan 0.7 1.5 China 1.0 Hectares Source: Redefining Progress

12. The Spread of McWorld • Corporate strategies rely on visions of rapid growth in the developing world, sparked by increased consumerism in these nations • But if the entire world were to adopt the consumption patterns of industrial nations, unbearable strain would be placed on the health of the Earth’s natural systems • Challenge in the developing world: to develop strategies for leapfrogging directly to a sustainable economy

13. The Spread of McWorld Due to the global trade network, consumers are often shielded from the profound effects of their choices and consumption patterns on people and the environment

14. In China, unprotected migrant workers sift through the piles of electronic waste, burning plastics, cracking apart cathode ray tubes, and pouring acid over circuit boards to extract precious metals • This process releases carcinogenic smoke in the air and severely pollutes the water Example: Electronic Waste What happens to the growing mounds of computers, mobile phones, televisions, and other electronics that are discarded every day?

15. In Panama, bananas are grown in huge, monoculture plantations that are heavily dosed with pesticides applied directly by unprotected workers or through aerial spraying • The chemicals pollute the water supply, and have been linked with increased cancer rates in local communities Example: Banana Industry How are prices for bananas kept so low?

16. Fair trade guarantees coffee growers a set price above world market levels, to cover production costs and to assure a decent living, and a range of other social and environmental benefits • More stable markets allow farmers to grow shade-grown, organic coffee in areas once heavily dosed with pesticides Example: Coffee What are the benefits of fair-trade coffee?

17. Global Cooperation for Sustainable Consumption International awareness of these problems is growing, and commitments are being made to transform unsustainable patterns of consumption and production

18. Highlights of the Earth Summit in Rio de Janeiro, 1992 • Recognition of the disparity between the excessive demands and unsustainable lifestyles of the rich and the inability of the poor to meet their basic needs • Action plan initiated to • - promote greater energy and resource efficiency • - minimize waste generation • - encourage environmentally sound purchasing decisions • - shift toward pricing systems that incorporate hidden environmental costs

19. In the decade following the Earth Summit… • Several international organizations have been active in follow-up • U.N. Commission on Sustainable Development • U.N. Environment Programme (UNEP) • Organization for Economic Cooperation and Development (OECD)

20. In the decade following the Earth Summit… • Governments made progress in strengthening several international treaties • 2000 Cartagena Protocol on Biosafety to the U.N. Convention on Biological Diversity • 2000 Stockholm Convention on Persistent Organic Pollutants • 1997 Kyoto Protocol to the U.N.’s Framework Convention on Climate Change

21. In the decade following the Earth Summit… • Forest Stewardship Council (FSC) • independent body established to set standards for sustainable forest production through a cooperative process • 39 million hectares of commercial forest in 58 countries have been certified • Marine Stewardship Council (MSC) • modeled on the FSC • 170 certified seafood products are offered in 14 countries

22. Global Cooperation for Sustainable Consumption However, the limited gains made since the Earth Summit in 1992 have been largely overwhelmed by the continued global growth of the consumer society

23. Highlights of the 2002 World Summit on Sustainable Development in Johannesburg • Some elements of the Plan of Implementation: - involving governments from all countries, international organizations, the private sector, and NGOs in bringing about the needed shifts • increasing investments in cleaner production and eco-efficiency • enhancing corporate environmental and social responsibility • promoting the internalization of environmental costs and environmentally sound procurement policies

24. From Johannesburg to Cancun and Beyond • Ministerial meeting of the World Trade Organization (WTO) in Cancun, 2003 • Fundamental differences exist between international trade rules and emerging environmental practices that can impede efforts to promote more sustainable patterns of consumption and production • Disputes over issues such as investment, government procurement, and agricultural trade subsidies brought the talks to a halt

25. Examples of Clashes Between Trade and Environmental Policies Beef Hormones (European Union and U.S.) • The EU banned the import of beef from the U.S. after growth-promoting hormones were found in the meat • The U.S. imposed retaliatory trade restrictions against the EU Tuna-Dolphin (U.S. and Mexico) • The U.S. passed a law restricting imports of tuna fish caught in ways that harm dolphins • The General Agreement on Tariffs and Trade panel concluded the U.S. could not embargo Mexican tuna imports

26. Examples of Clashes Between Trade and Environmental Policies Shrimp-Turtle (India and U.S.) • The U.S. banned imports of shrimp harvested by methods harmful to sea turtles • The WTO Appellate Body ruled against the U.S. Genetically Modified Organisms (U.S. and EU) • The EU banned the import of GMOs, viewing them as a health risk • The U.S., Canada, and Argentina asked the WTO to form a dispute panel regarding the issue

27. From Johannesburg to Cancun and Beyond • The way forward is complicated by the need to forge a consensus among a great diversity of interests from around the world • However, the terms of the debate are shifting as a growing number of people support the development of a global community based on respect for people and nature

28. About the Author Hilary French is a Senior Researcher at the Worldwatch Institute and Director of the Institute’s Globalization and Governance Project

29. More information on State of the World 2004 at www.worldwatch.org